On October 10, Gelonghui announced that Frontier Biotech Co., Ltd. (688221.SH), through its wholly-owned subsidiary Shanghai Frontier Jianling Biotechnology Co., Ltd. (referred to as Shanghai Jianling), holds 100% equity of Sichuan Frontier Biopharmaceutical Co., Ltd. (referred to as Sichuan Frontier); and as the investment subject of Sichuan Frontier, it has invested in and built a high-end peptide active pharmaceutical ingredient production base in Jintang County, Chengdu City, Sichuan Province.

To focus on core business development and optimize resource allocation, under the premise of locking Sichuan Frontier as the future commissioned producer of the company's active pharmaceutical ingredients, the company plans to transfer 70% equity of Shanghai Jianling to Tibet Duorui Pharmaceutical Co., Ltd. (referred to as Duorui Pharmaceuticals), a controlling subsidiary of RuiLeKang Enterprise Management Co., Ltd. (referred to as the purchaser, RuiLeKang) of Duorui Pharmaceuticals. In August 2024, Frontier Biotech, Shanghai Jianling, and Duorui Pharmaceuticals signed an "Investment Intention Agreement" on the transfer of 70% equity of Shanghai Jianling.

In October 2024, Frontier Biotech, Shanghai Jianling, Sichuan Frontier, RuiLeKang, and Duorui Pharmaceuticals jointly signed a "Stock Transfer Agreement" with effective conditions. The agreement stipulates that the acquirer, while purchasing the equity of the target, shall bear the obligation to repay the shareholder loans to Frontier Biotech and release its loan guarantees. In this equity transfer, RuiLeKang will pay the equity transfer payment to the company and provide funds to Sichuan Frontier to repay the company's loan principal and interest, with a total amount of 270.9614 million yuan, of which the consideration for the 70% equity transfer of Shanghai Jianling is 77 million yuan, and Sichuan Frontier will repay the remaining balance of loan principal and interest to the company totaling 193.9614 million yuan. The above equity transfer is beneficial for the company to revitalize existing assets, improve resource utilization efficiency, and enhance cash flow.

Frontier Biotech has provided a guarantee balance of 90 million yuan to Sichuan Frontier. The actual controller of the purchaser, Duorui Pharmaceuticals, has promised that if RuiLeKang fails to facilitate Frontier Biotech in releasing the guarantee of Sichuan Frontier's bank loans by December 31, 2024, then Frontier Biotech has the right to terminate the stock transfer agreement, and Duorui Pharmaceuticals will cooperate with the company to complete the procedures for returning the already acquired equity. From the signing of the stock transfer agreement until the company's guarantee is released, if the guarantee obligation is triggered, the company has the right to recover from Duorui Pharmaceuticals.

After this transaction is completed, the company directly holds 30% equity of Shanghai Jianling, indirectly holding 30% equity of Sichuan Frontier through Shanghai Jianling. Shanghai Jianling and Sichuan Frontier will no longer be included in the company's consolidated financial statements, and according to the "STAR Market Listing Rules of the Shanghai Stock Exchange" and relevant laws and regulations, and based on the prudence principle, the company will classify Shanghai Jianling and Sichuan Frontier as related parties. The guarantees and loans to Sichuan Frontier mentioned above will passively become guarantees and loans to related parties.